Gerry Frigon, Chief Investment Officer at TaylorFrigon talks to Business Insider about investing in ‘enablers’ in high growth industries.

"A CIO overseeing $230 million explains how he's gaming the biotech industry by investing with minimal risk — and shares his 2 favorite stocks in the space."


"Age-old investing folklore says that risk and return are inextricably linked. If you want a higher return, you have to take more risk. An investor can't have one without the other. But Gerry Frigon, the founder and chief investment officer of the $230 million Taylor Frigon Capital Management, doesn't adhere to that school of thought — and he's found a way to play high growth trends with less traditional risk exposure."


Read the full article here...



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Why Is Silicon Valley Ignoring Core Technology Companies?

This article written by Gerry Frigon first appeared in ValueWalk on December 18, 2020

Recently, the world witnessed the largest IPO ever.  Saudi Aramco went public and just a couple of days later it hit the $2 Trillion level in market value.  The company has been around in one form or another for decades and it is somewhat ironic that the world’s largest company, and the first to go public at such a valuation, is an oil company. Given the “unicorn-like” mentality of venture capital nowadays, one would have thought it would be a social networking application or a ride-sharing company, or a real estate leasing arbitrage company parading around as a technology company that would be the first to hit such lofty levels.  One can only imagine that this is quite disappointing to the twenty-first century Silicon Valley venture mavens who are convinced windmills and sun-worshipping is the key to our energy future, but I digress. The real scandal in the news of this massive IPO has nothing to do with energy.  Instead, it is the lack of energy that has persisted in the financing of core technology startups thus far in this century and has resulted in a persistent lack of IPOs in general... Continue Reading
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Investment Climate January 2020

The year 2019 ended with strong price increases for major markets in the United States and capped off a very good year overall with large company stocks outperforming their smaller counterparts when comparing indices based on company size.  

Interestingly, while small and mid-cap stocks clearly underperformed large company stocks in the general market this past year, for our growth portfolios, the best performing stocks came from the ranks of mid-cap, small-cap and even micro-cap companies.  Israeli-based Novocure, Ltd., a developer of cancer treatments which use electric “fields tuned to specific frequencies” to disrupt solid tumor cell division, grew 151% and is now over $8B in market value.  Phoenix-based Carvana, Inc., an online used car retailer, was up over 181% and the lone large-cap company in the mix Canada-based Shopify, Inc., a software platform that allows online businesses of all sizes to run their entire business online, was up 187%.  Micro-cap biotech company Compugen, Ltd., also Israeli-based, was up over 174% and optical component manufacturer Inphi Corporation, based in Sunnyvale, CA., was up over 130% to round out the best performers.

This result was that our Core Growth Strategy outperformed the general market averages again in 2019.  

These top performers are a good indication that our portfolios were favorably impacted by a very broad mix of companies representing a diverse set of industries, so there was no one “sector” that could be identified as the reason for positive influence on the portfolio.  Company-specific dynamics were the driver for each of the best performers.

The same is true of those that were the biggest detractors in the portfolio.  QuickLogic Corporation (-41%), provider of analog and mixed-signal semiconductors for communications and data center markets, Green Dot Corporation (-71%), a consumer-oriented financial technology company, and Vuzix Corporation (-58%), a maker of augmented reality smart glasses, each are clearly representative of differing groups.  In all those cases, while the near-term performance has been disappointing, we believe there remains significant potential in the future.

Looking forward, most of our exposure in the portfolio is in the information technology and healthcare-related sectors.  What is most important to understand, however, is that in those areas, the portfolio is represented by significant diversity amongst industries, many of which have sensitivities that vary greatly from each other.  Thus, it can be misleading to look at the overall portfolio weighting of over 50% in “information technology” (IT) and assume that it is heavily concentrated.  For example, in that broad “information technology” group we find such differing industries represented as cybersecurity software maker CyberArk, Ltd. and analog semiconductor foundry (also known as a “fab” or “fabrication plant”) Tower Semiconductor, Ltd.; subscription software platform company Zuora, Inc. and Airgain, Inc., a designer of embedded antenna technologies for the wireless industries. 

In healthcare (with roughly 25% representation), veterinary products manufacturer IDEXX Laboratories, Inc. differs greatly from Apyx Medical Corporation, maker of electrosurgical devices used in cosmetic procedures, or Vapotherm, Inc., a maker of devices used to non-invasively treat patients who are suffering from respiratory distress.

These are some examples of companies that fit well into our narratives that are built around three schemas: demographics, technology and business processes.  Descriptions of the companies mentioned above give an idea of some of the narratives relating to healthcare and technology.  Others, such as the rise of the subscription economy, relate to business processes and how business is conducted; or to the significant impact that biotechnology is having on the treatment of disease. We also invest in companies that are not necessarily inventing these new treatments, but instead companies which support the proliferation of such technologies.  A great example is Cryoport, Inc., which provides cryogenic transportation of drugs both in the development phase and also during commercialization.

Each of these narratives, as well as many others, are represented in some form in our portfolio.  With economic tailwinds at this point, we expect the companies in our portfolio to either continue on the positive track they’ve been on, or to achieve breakthroughs in their efforts at attaining the expectations we have for them.  It is entirely possible that some of the smallest companies in our portfolio will be where the largest returns come from in the next year or two as some long-awaited business prospects come to fruition in specific companies.  This could well result in a circumstance where the returns in our portfolio significantly diverge from those of the broader market which is so heavily dominated by the “mega-cap” stock such as Google, Amazon, Apple and Facebook.  Stay tuned.

Disclosures: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Taylor Frigon Capital Management LLC (“Taylor Frigon”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Taylor Frigon. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Taylor Frigon is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Taylor Frigon’s current written disclosure Brochure discussing our advisory services and fees is available upon request. If you are a Taylor Frigon client, please remember to contact Taylor Frigon, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.

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Investment Climate Oct 2019: Good businesses are resilient



The investment climate in the third quarter of 2019 was marked by significant volatility but little net progress in overall market averages driven by an economy showing signs of slowing down.  The result was that the average large stock moved a little higher, small stock averages were a little lower, and interest rates continued to slide giving bond prices the biggest boost of all major asset classes.  Thus, none of the net changes in asset prices for the quarter caused much change in the above-average returns that stock and bond markets have experienced so far in 2019.  Our own growth portfolios were generally weaker in the third quarter, yet still maintained their market-beating returns for the year while income-oriented portfolios grew at faster paces than average. 

We expect this “correction” in growth company prices may continue, as we navigate the historically weak fall season, before resuming strong performance as more clarity on trade issues and the economy comes into view.

We are witnessing an abundance of consternation regarding the state of the economy.  Will the trade war with China finally derail the long economic cycle that has persisted since the 2008-2009 financial crisis and accelerated in the last few years?  Is yet another “inversion” in the yield curve (long-term interest rates lower than short term interest rates) a sign that we are headed for recession?  Is the toxic political climate going to make it impossible to get the myriad issues that face the country addressed by government (healthcare, tax simplification, immigration, homeless and vagrancy in many large U.S. cities)? 

These are very real issues that need to be addressed at some point.  But the constant drumbeat from the “crisis industry” (otherwise known as the media) appears to us to be missing the resiliency of the business community, particularly in the U.S., but also in some other parts of the world, too.  It never ceases to amaze us how the saying our mentor, Dick Taylor, often expressed: “we get by in spite” is so simple yet also so poignant!  It underscores that in the real world, outside of what is portrayed every second of every day in the news media, people keep working, creating, innovating, managing their businesses and providing for their families in a way that keeps moving us forward. 

This is not to say there are never setbacks -- there are.  And they are rarely ever obvious before they happen.  This is why we adhere to another saying that came from Dick Taylor’s own mentor, Thomas Rowe Price: “the great fortunes in this country were made by men who owned well-managed businesses in front of fertile fields of future growth, through multiple market and economic cycles.”  We are constantly repeating this, and we will continue to do so.  This is because we have seen it work very well for our clients over many years.

Currently, the “fertile fields” we are focusing on are largely in technology companies that are “virtualizing” those tasks which used to be done with hardware; building microchips that allow for much longer battery life; creating and allowing us to experience virtual and augmented reality; and using new methods to secure networks from cyber-attacks.  Distributed-ledger computing and blockchain are still emerging but we believe these technologies also promise to transform computing in the coming decade.

Fertile fields are also found in medical technology where new ways of discovering drugs utilizing artificial intelligence, genomics, and re-programming DNA are driving great progress in treatment of diseases.  And they are in medical device breakthroughs in the treatment of cancer and eye diseases. 

New business processes are driving innovation as well, whether it be more productive manufacturing methods based on nanotechnology, digital textile printing or advanced machine learning tools that provide businesses with levels of situational awareness that improve productivity and, ultimately, profitability.  Financial technology is transforming the way people save, invest and make payments. 

There is always uncertainty in the world, financial and otherwise.  The current climate is no different than ever before, although it may seem more upside-down at times.  Nonetheless, sticking to these tried, true and simple investing rules makes for the most assured way to invest hard-earned money we have ever seen in our six decades of professional investing.  Stay tuned.

Disclosures: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Taylor Frigon Capital Management LLC (“Taylor Frigon”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Taylor Frigon. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Taylor Frigon is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Taylor Frigon’s current written disclosure Brochure discussing our advisory services and fees is available upon request. If you are a Taylor Frigon client, please remember to contact Taylor Frigon, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.

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Planet MicroCap interviews our CIO, Gerry Frigon, on Growth Stock Investing





Our CIO, Gerry Frigon, was recently interviewed by Robert Kraft of the Planet Microcap Podcast.

Gerry discusses the history of Taylor Frigon as well as the market, economy and investing in growth companies.  You can access the interview here.


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